Islamic banks call for better cooperation<\/p>\n
JAKARTA (JP): The ninth two-day international conference on
\nIslamic banking ended here Saturday, paving the way for better
\ncooperation among Islamic banks throughout the world.<\/p>\n
Bank Indonesia's Governor, J. Soedradjad Djiwandono, told
\nreporters that the conference also came up with a suggestion for
\nstronger support from governments and central banks to encourage
\nthe operation of Islamic banks.<\/p>\n
\"The regulatory frameworks of the central banks, especially in
\nsupervision activities, need adjustment,\" Soedradjad told
\nreporters about the result of the conference, which was
\nparticipated in by 130 Islamic banking experts representing
\ncentral banks, Islamic banks and financial institutions.<\/p>\n
Soedradjad said that the conference, jointly organized by Bank
\nIndonesia and the International Association of Islamic Banks,
\nalso agreed to form a committee to monitor the implementation of
\nthe policies set out by conference.<\/p>\n
He said that the conference paved the way for better
\ncooperation among Islamic banks worldwide in dealing with the
\ntechnical aspects of the banks, which base their service on
\nprofit or loss sharing arrangements rather than on interest as is
\nthe practice of conventional banks.<\/p>\n
\"For Indonesia, where the operation of Islamic banks is still
\nrelatively new, the conference's outcome is very beneficial,\" he
\nsaid. \"The theme of the conference was very much suitable for the
\nstage of development of our Islamic banks. So we can received a
\nlot of input,\" he added.<\/p>\n
Constraints<\/p>\n
The conference also discussed the constraints faced by Islamic
\nbanks in non-Islamic countries, such as the creation of liquidity
\ninstruments to support their operations.<\/p>\n
For Bank Indonesia, as the central bank, he noted, the
\ndevelopment of Islamic banks also poses new challenges in
\nproviding facilities for their liquidity needs.<\/p>\n
Soedradjad said that the central bank's facilities in
\nsecurities transaction activities are at present available only
\nfor non-shariah banks.<\/p>\n
Consequently, he added, it is necessary for Bank Indonesia to
\ncreate liquidity facilities that are compatible with the non-
\ninterest Islamic banks.<\/p>\n
He said that such facilities should have specific
\ncharacteristics so that they can be sold or bought as securities
\non the basis of nominal prices or at face value with a risk-
\nsharing agreement.<\/p>\n
The central bank also faces new challenges in the area of
\nsupervision of the Islamic banks because the Indonesian banking
\nlaw guarantees equal treatment to both Islamic and conventional
\nbanks. (hen)<\/p>",
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